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 Xxxxxxx X. Xxxxxx (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.
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 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.
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(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.
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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 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 Company or any affiliate
where his position will be related to the business of the
Company; or
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(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: Xxxxxxx X. Xxxxxx
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
(000) 000-0000 telephone
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.
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
------------------------------
Xxxx X. Xxx, President and CEO
CONSULTANT:
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
For payment purposes, please furnish the following information:
Home Address:
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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