Ex.10.5(b)
CONSULTANT AND NON-COMPETITION AGREEMENT
AGREEMENT effective as of April 5, 1995, between InterNutria, Inc., a
corporation duly organized and existing under the laws of the state of Delaware
and having a principal place of business at One Ledgemont Center, 00 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter referred to as
the "Company") and Xxxxxx Xxxxxxx, Ph.D. (hereinafter referred to as the
"Consultant") having an office at the Massachusetts Institute of Technology
("MIT"), Cambridge, Massachusetts, and residing at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Company intends to engage in the business (the "Business")
of discovering, developing, manufacturing, marketing and selling of proprietary
and nonproprietary consumer nutritional food and beverage products or products
which would be deemed by the Food and Drug Administration ("FDA") to be foods or
nutritional supplements, including products intended to treat pre-menstrual
syndrome or obesity (the "Products")
WHEREAS, Consultant is an expert in scientific matters of particular
importance to the Company in achieving its objectives relating to the Business;
WHEREAS, the Company desires to retain the Consultant to assist the
Company in, among other things, developing and exploiting certain inventions and
confidential information, including patent rights obtained thereon, relating to
the Business and to serve as a member of the Company's Scientific Advisory
Board;
WHEREAS, the Company desires, in addition to the engagement of the
Consultant, the assignment from the Consultant of any inventions, know-how and
confidential information which relates to the Business and which have been
developed in whole or in part by the Consultant in exchange for the grant by the
Company to the Consultant of an equity interest in the Company;
WHEREAS, the Company desires that the Consultant not compete with
Company, provided, that the Company acknowledges that the Consultant is a
part-time professor at the Massachusetts Institute of Technology;
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the parties hereto do hereby agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following terms
and their variant forms shall have the meaning set forth below:
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1.1 "INVENTION" shall mean any discovery, as well as any
improvements thereto, which is new or which the Consultant has a reasonable
basis to believe may be new and which the Company reasonably believes may be
patentable.
1.2 "PROPRIETARY INFORMATION" shall mean:
(a) Information related to the Business of the Company,
(i) which derives economic value, actual or
potential, from not being generally known to or
readily ascertainable by other persons who can obtain
economic value from its disclosure or use; and
(ii) which is the subject of efforts that are
reasonable under the circumstances to maintain its
secrecy; and
(b) All tangible reproductions or embodiments of such
information including any patents or patent applications
covering such information but excluding copyrightable works of
authorship created by Consultant which were not created at the
direction of or on behalf of the Company or in Consultant's
capacity as a Consultant to the Company.
Assuming the criteria in (a)(i) and (a)(ii) above are satisfied, Proprietary
Information includes, but is not limited to, technical and nontechnical data
related to the formulas, patterns, designs, compilations, programs, Inventions,
methods, techniques, drawings, processes, finances, actual or potential
customers and suppliers, existing and future products, and employees of the
Company. Proprietary Information also includes information which has been
disclosed to the Company by a third party and which the Company is obligated to
treat as confidential.
1.3 "SUBJECT INVENTION" shall mean any Invention which is
conceived by the Consultant alone or in a joint effort with others resulting
from work engaged in by the Consultant on behalf of or at the direction of the
Company during the Consultant's engagement by the Company or which:
(a) may be reasonably expected to be used in the Company's
research and development efforts relative to the Business of
the Company, or in a current product or future product of the
Company, or a product similar to a Company product or future
product; or
(b) is in an area of technology or research which is the same
as or substantially related to the areas of technology or
research with which the Consultant is involved in the
performance of her duties as a consultant to the Company
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and which is not owned by MIT; provided, however that a Subject Invention shall
not include an Invention which relates solely to a product or a potential
product if the Company has indicated in writing that it does not intend to
develop or commercialize such product (an "Excluded Product").
2. RETENTION; TERM
(a) Subject to the provisions of subsection 2(c) below, the
Company hereby retains the Consultant for a two-year period commencing as of
April 5, 1995 and the Consultant hereby accepts such retention.
(b) The term of this Agreement shall automatically be extended
for consecutive periods of one year each, unless either party shall give notice
to the other at least 60 days before the expiration of the initial or then
current renewal term. The obligations of Consultant pursuant to Sections 7
through 11 of this Agreement shall survive the termination of the engagement of
Consultant hereunder.
(c) The effectiveness of this Agreement is conditioned upon
the execution by Consultant and Interneuron Pharmaceuticals Inc. ("IPI") of an
agreement ( the "Termination Agreement") terminating Consultant's Consulting and
Non-Competition Agreement with Interneuron (the "IPI Consulting Agreement"). In
the event the acquisition by the Company from Xxxxxx Laboratories, Inc.
("Xxxxxx") of the product known as NutriFem PMS and all related intellectual
property rights (the "Assets") is not consummated, then the Company may
terminate this Agreement effective as of the end of the first year of this
Agreement.
3. DUTIES
Subject at all times to the consultation with the officers and
board of directors of the Company or their designated employees or
representatives, the Consultant shall be referred to as Consultant and
Scientific Founder and shall at the request of the Company, be available for a
minimum of four days per month during the first year of the Agreement and five
days per month thereafter, to render advisory and consultation services to the
Company, in addition to attendance by the Consultant at Scientific Advisory
meetings if a Scientific Advisory Board is established by the Company. Such
advisory and consultation services shall be approved in advance by the Company
and shall (i) be carried out at the facilities of the Company or at such other
place as may be mutually convenient and agreed to by the Company and the
Consultant, as appropriate, (ii) relate primarily to the identification,
research and development, clinical testing and commercialization of the Products
("Consulting Field"), (iii) include assisting the Company in obtaining licenses,
assignment or other rights to commercialize the patents or technologies
discovered by Consultant, as appropriate, subject to the provisions of Section 6
hereof and assist the Company in negotiations relating to such commercialization
and (iv) include public relations activities, such as public appearances and
interviews in support of the Company and the
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Products. The Company agrees to include Consultant as a nominee for election as
a director of the Company, and to recommend such election, during the term of
this Agreement.
4. COMPENSATION
(a) The Company shall pay to the Consultant for all services
as a consultant, compensation at the rate of $70,000 per annum for the first
year of this Agreement, $85,000 for the second year of this Agreement and, if
the term of this Agreement is extended pursuant to Section 2(b) hereof,
Consultant's compensation for each additional year shall be at least one hundred
and five percent (105%) of the annual compensation paid by the Company for the
Consultant for the previous year.
(b) In consideration for the representations, agreements and
covenants contained herein, the Company shall grant Consultant ten-year options
under the Company's 1995 Stock Option Plan (the "Plan") to purchase such number
of shares (the "Shares") of its Common Stock so that, assuming exercise in full
of such options and of all other outstanding options of the Company on the date
of this Agreement, Consultant would own five percent (5%) of the Common Stock of
the Company. The Options shall be exercisable at a price equal to the par value
of the Common Stock in installments of 25% per year, on a cumulative basis,
commencing on the day immediately preceding the first anniversary of the date of
this Agreement, and shall be subject to the terms and conditions of the Plan.
5. REIMBURSEMENT FOR EXPENSES
During the term of this Agreement, the Consultant shall be
reimbursed for reasonable traveling expenses incurred in connection with her
activities hereunder, only if such expenses are approved in advance by the
Company and upon submission of appropriate vouchers and in accordance with
normal Company expense reimbursement policy.
6. INTELLECTUAL PROPERTY; CONSULTANCIES
(a) Consultant represents that Schedule 6(a) hereto contains a
complete listing of patents or patent applications owned, filed, or discovered
by either Consultant alone or by Consultant jointly with a third party and not
assigned to MIT as of the date hereof.
(b) Consultant represents that with the exception of MIT and
IPI, and the entities listed on Schedule 6(b) hereto, Consultant is not a party
to any consulting agreement with, consults with or has any other obligation or
understanding to provide services to any entity other than the Company.
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7. COVENANTS
(a) COVENANT NOT TO COMPETE
During the term of this Agreement and any renewal
term, and for a period of one year thereafter, the Consultant agrees to consult
exclusively for the Company in the Consulting Field and not to consult with or
become employed by or enter into discussions or negotiations to consult with or
to become employed by or which relate to commercialization of products in the
Consulting Field with any other entity or to compete, directly or indirectly,
with the Company in the Consulting Field, except to the extent related to
Excluded Products, without the prior written consent of the Company, except that
Consultant as appropriate may provide consulting services to IPI so long as
Consultant's activities on behalf of IPI do not conflict with or directly
compete with the Company and provided that Consultant's covenant not to compete
during the one year period after this Agreement terminates is subject to the
Company compensating Consultant (provided Consultant is in compliance with such
covenant) during such one year period at the rate of 50% of the compensation
paid to Consultant during the immediately preceding year pursuant to Section
4(a) hereof.
(b) NON-SOLICITATION
The Consultant expressly covenants and agrees that
she will not, at any time during the term of this Consulting Agreement, and for
a period of one (1) year thereafter, directly or indirectly, (a) induce or
attempt to influence any employee of, or consultant under contract with, the
Company to leave its employ; or (b) aid, or agree to aid, any competitor or
supplier of the Company in any attempt to hire any person who shall have been
employed by, or who was a consultant under contract with, the Company, within
one year preceding such requested aid; or (c) induce, or attempt to influence,
any person who was a supplier to the Company to transact business with a
competitor of the Company; provided, nothing contained herein shall otherwise
prevent Consultant from writing letters of recommendation for any such person if
Consultant has otherwise complied with the terms of this Consulting Agreement.
(c) COOPERATION IN LICENSING
Consultant agrees (i) to use her best efforts to
assist the Company in obtaining licenses or other rights to use patents or other
proprietary rights held by MIT or other inventors relating to the Business of
the Company including, without limitation, any patents, patent applications,
know-how or proprietary information owned by Xxxxxx, and (ii) not to negotiate
with any other entity with respect to licensing to such entity rights in the
Consulting Field without first obtaining the Company's prior written consent,
unless the Company has expressed its intention not to seek a license of such
rights.
For the purposes of this Section 7, the term
"directly or indirectly", . . . shall include participation as an officer,
director, employee, consultant agent, representative, shareholder, partner,
joint venturer or individual proprietor. The foregoing shall not be
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construed as preventing Consultant from investing assets in such form or manner
where Consultant does not perform services for such company in which such
investment may be made. The ownership by the Consultant of stock listed on a
national securities exchange, of any corporation conducting such competing
business, provided Consultant and members of Consultant's family, in the
aggregate, do not beneficially own more than two (2%) percent of the stock of
such corporation, shall not be deemed a violation of this Agreement.
8. INVENTIONS
(a) SUBJECT INVENTIONS CONCEIVED DURING CONSULTING ENGAGEMENT
The Consultant agrees that all Subject Inventions
conceived or first practiced by her and relating to the Business of the Company,
and all patent rights and copyrights to the Subject Inventions, will become the
property of the Company, and the Consultant hereby irrevocably assigns to the
Company all of her rights to all Subject Inventions.
(b) NOTIFICATION OF CONCEPTION OF INVENTION
The Consultant agrees that if she conceives an
Invention during her engagement by the Company and there is a reasonable basis
to believe that the Invention is a Subject Invention, she will promptly (and in
any event prior to any submission for publication of such Invention) provide a
written description of the Invention to the Company adequate to allow evaluation
for a determination as to whether the Invention is a Subject Invention and to
allow sufficient time for the preparation and filing of a patent application
relating to such Subject Invention prior to any proposed publication of the
Subject Invention, in accordance with Section 8 hereof.
In the event the Consultant has a reasonable basis to
believe the Subject Invention is patentable and, by the 10th business day after
receipt by the Company of Consultant's written description of the Invention, the
Company has not yet notified Consultant of its intention to retain patent
counsel to prepare a patent application on such Subject Invention, then
Consultant may prepare and file such a patent application using patent counsel
acceptable to the Company. The Consultant's retention of patent counsel shall
not affect the Company's rights under Section 7(a), subject to the provisions of
Section 8.
(c) RECORDS
The Consultant shall maintain appropriate records of
all research and development activities adhering to any specific guidelines for
the same which are promulgated by the Company, which shall, if properly
maintained and promptly disclosed to the Company, satisfy the requirement of
providing a written disclosure of any Subject Inventions. It is agreed that all
the notebooks and written disclosures, and any copyrights or ideas therein, are
the sole and exclusive property of the Company.
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(d) NO PREVIOUSLY CONCEIVED INVENTIONS
The Consultant warrants and represents that she has
not, except as set forth on Exhibit B hereto, as of the date of this Agreement,
previously conceived any Invention or acquired any ownership interest in any
Invention (other than any Invention assigned by the Consultant to the Company
contemporaneously with the execution of this Agreement) which:
(i) Relates to the Business of the Company; and
(ii) Is the Consultant's property, or of which
she is a joint owner with another person or
company; and
(iii) Would be a Subject Invention if such
Invention were made while a consultant to
the Company; and
(iv) Which has not previously been transferred,
assigned or licensed to the Company.
In the event that the foregoing warranty and representation is breached by the
Consultant, the Invention in question shall be considered to be licensed to the
Company on a non-exclusive, perpetual, royalty free basis, for any use in or
reasonably related to the Business of the Company.
(e) CONSULTANT'S PRIOR PATENT RIGHTS
The Consultant does not own any patents, individually or
jointly with others, except those specifically described on Schedule 6(a)
attached hereto and incorporated herein by reference.
9. PATENT APPLICATIONS
The Consultant agrees that should the Company elect to file an
application for patent protection either in the United States or in any foreign
country, on a Subject Invention of which the Consultant was an inventor, she
will execute all necessary documentation relating to the patent applications,
including formal assignments to the Company.
The Consultant further agrees that she will cooperate with
attorneys or other persons designated by the Company by explaining the nature of
any Subject Invention for which the Company elects to file an application for
patent protection, reviewing applications and other papers and providing any
other cooperation required for prosecution of the patent applications. The
Company will be responsible for all expenses incurred for the preparation and
prosecution of all patent applications on Subject Inventions assigned to the
Company.
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10. PROPRIETARY INFORMATION
(a) OWNERSHIP OF PROPRIETARY INFORMATION
All Proprietary Information received or developed by
the Consultant while she is a consultant to the Company will remain the sole and
exclusive property of the Company.
(b) OBLIGATIONS OF THE CONSULTANT
The Consultant will hold the Proprietary Information
in trust and strictest confidence, and will not use, reproduce, distribute,
disclose or otherwise disseminate the Proprietary Information except to the
extent necessary to perform the duties assigned to her by the Company.
(c) DELIVERY UPON TERMINATION
Upon termination of her engagement by the Company,
the Consultant will promptly deliver to the Company all property belonging to
the Company, including without limitation all Proprietary Information then in
her possession or control.
11. CONFIDENTIAL INFORMATION
Consultant is executing simultaneously with the execution
hereof, the Company's standard form of special terms and conditions for
non-disclosure of confidential information, a copy of which is annexed hereto.
12. CONSULTANT'S REPRESENTATIONS
The Consultant represents that she is not now under any
agreement, express or implied, nor has she previously at any time entered, nor
will she during the term of this agreement, enter into any agreement with any
person, firm or corporation which would or could in any manner preclude or
prevent her from entering into and performing this Agreement according to its
terms.
13. RELATIONSHIP OF PARTIES
(a) It is hereby agreed between the parties that the
Consultant is an independent contractor, and shall not hold herself out to be an
officer, partner or employee of the Company for any purpose whatsoever. The
Consultant shall control the manner and means of accomplishing the agreed
services, and shall be responsible for the full, adequate, and timely completion
of said services. The Company may, during the term of this Agreement, engage
other independent contractors to perform the same or similar work that the
Consultant performs hereunder.
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(b) None of the benefits provided by the Company to its
employees, including but not limited to medical, life, accident, or disability
insurance, pension or profit sharing plans, unemployment or Worker's
Compensation, are available to Consultant. No withholding or Federal or state
income taxes, social security or related contributions shall be made from
payments made to the Consultant, and the Consultant shall be solely responsible
for payment of any such taxes or contributions due on account of payments
received under this Agreement.
(c) The Consultant shall observe all laws and governmental
regulations and all of the Company rules and regulations while providing
services.
14. NOTICES
Any notice or other communication under this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
against receipt therefor or when mailed registered or certified mail, postage
prepaid, return receipt requested, as follows:
(a) To the Company:
InterNutria, Inc.
One Ledgemont Center
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
(b) To the Consultant:
Massachusetts Institute of Technology
Xxxxxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
or to such other address as either party shall have given by notice hereunder to
the other.
15. SEVERABILITY OF PROVISIONS
If any provision of this Agreement shall be declared by a
Court of competent jurisdiction to be invalid, illegal or incapable of being
enforced in whole or in part, the remaining conditions and provisions or
portions thereof shall nevertheless remain in full force and effect and
enforceable to the extent they are valid, legal and enforceable, and no
provision shall be deemed dependent upon any other covenant or provision unless
so expressed herein.
16. ENTIRE AGREEMENT; MODIFICATION
This Agreement contains the entire agreement of the parties
relating to the subject matter hereof, and the parties hereto have made no
agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein. No
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modification of this Agreement shall be valid unless made in writing and signed
by the parties hereto.
17. BINDING EFFECT
The rights, benefits, duties and obligations under this
Agreement shall inure to, and be binding upon, the Company, and its respective
successors and assigns and upon the Consultant and her representatives, heirs,
and legatees. Consultant may not assign her obligations hereunder.
18. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
19. UNIQUENESS; REMEDIES
It is expressly understood and agreed that the services to be
rendered hereunder by the Consultant are special, unique, and of extraordinary
character, and in the event of the breach or threatened breach by the Consultant
of any of the material terms and conditions of this Agreement, the Company shall
be entitled to institute and prosecute any proceedings in any court of competent
jurisdiction, either in law or equity, for such relief as it deems appropriate,
including without limitation, proceedings to obtain damages, to enforce specific
performance by the Consultant, or to enjoin Consultant from performing services
rendered under this Agreement for any other person or entity.
20. HEADINGS
The headings of the paragraphs herein are inserted for
convenience and shall not affect any interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
the day and year first above written.
InterNutria, Inc.
By: /S/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx, Chairman
Consultant:
/S/ XXXXXX XXXXXXX
Xxxxxx Xxxxxxx, Ph.D.
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INTERNUTRIA, INC.
(the "Company")
SPECIAL TERMS AND CONDITIONS FOR CONFIDENTIAL INFORMATION
The Company has or may disclose certain confidential information (the
"Confidential Information") to you in connection with the Business of the
Company.
The Confidential Information heretofore or hereafter made available to you was
and will be made on the following terms and conditions.
1. You will maintain all the Confidential Information in secrecy,
will not disclose it to others, and will use it only for the
purposes of the Consultant and Non- Competition Agreement
executed simultaneously herewith.
2. You will disclose the Confidential Information only with the
permission of the Company, and only to those who have reason
to know and who have undertaken an obligation of secrecy to
you at least as extensive as that which you have to us under
the terms of this agreement.
3. Your obligations of secrecy and non-use under this agreement
will not extend to any information which:
a. is generally available to the public as of the date of this
agreement or subsequently becomes available to the public
through no fault of yours, or
b. was already known to you prior to your receipt from us, as
evidenced by your prior written records, or
c. is disclosed to you by a third party who did not derive the
information directly or indirectly from us.
4. All memoranda, papers, letters, notes, notebooks and other
written or printed matter and all copies thereof in any way
relating to the business of the Company that come into your
possession or are made by you shall be held by you as our
property and returned to us promptly upon our request.
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If you are willing to accept the disclosures of the Confidential
Information under these terms and conditions, please indicate your acceptance by
signing the enclosed copy of this letter and returning it to us.
Very truly yours,
InterNutria, Inc.
By: /S/ XXXXX X. XXXXXX
Xxxxx X. Xxxxxx, Chairman
Accepted this 12th day of April, 1995
/S/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx, Ph.D.
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SCHEDULE 6(A)
1) "Compositions for treating Pre-menstrual or Late Luteal Phase Syndrome
and methods of their use" (with Xxxxxxx Xxxxxxx).
U.S. Patent No: 111-771
2) Composition for treating Tobacco Withdrawal Symptoms and Methods for
their use" (with Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxx).
U.S. Patent No: 262,625
3) "Composition Methods for Losing Weight".
U.S. Patent No: 08-1,481,624
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SCHEDULE 6(b)
Les Laboratoires Servier
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