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CONSULTING AGREEMENT
AGREEMENT, made this 14th day of February, 1997, by and between
XXXXXXX X. XXXXXXXX, M.D., residing at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 ("Consultant") and PANAX PHARMACEUTICAL COMPANY LTD., a New
York corporation, (the "Company"), located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
WHEREAS, Consultant has been instrumental in the invention and
development of pharmaceutical products and has substantial experience in the
management and operation of medical practices; and
WHEREAS, the Company desires to engage, and Consultant desires to be
engaged, as a consultant on the terms and conditions as set forth below;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, it is hereby agreed as follows:
1. The Company hereby retains Consultant as a consultant and
Consultant agrees to serve the Company as a consultant during the term of a
certain License Agreement (the "License Agreement") dated February 14, 1997
between the Company and ALW Partnership.
2. Consultant shall render consulting services to the Company
as required to develop clinical protocols, establish and monitor clinical
trials, review clinical results, assist in development of FDA filings, present
clinical and product information to peers and, if requested, participate as a
member of the Company's Scientific Advisory Board. Consultant shall also
perform such management consulting services on behalf of the Company as
may be reasonably assigned to Consultant from time to time by the Board of
Directors of the Company or its President. In all instances, the rendering
of such services by Consultant may be effected, if he desires, after normal
working hours or on Saturday, Sunday or holidays and shall be subject to the
reasonable availability of Consultant.
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3. As compensation to Consultant the Company shall pay
Consultant the sum of $2,000.00 for each eight (8) hour day, including credit
for travel time outside of Philadelphia, or the pro rata portion thereof that
Consultant devotes to the Company. In calculating such compensation, time
spent by Consultant pursuant to Section 3.A. of the License Agreement shall
not be considered as time spent consulting hereunder. Consultant shall
receive an Option Agreement granting Consultant options ("Options") to acquire
up to 150,000 shares of the Company's Common Stock on the terms and conditions
contained in the Option Agreement, a copy of which is attached hereto as
Exhibit A.
4. Consultant shall be entitled to reimbursement from the
Company for reasonable and necessary expenses incurred by Consultant with the
prior approval of the Company in connection with the performance of
Consultant's duties hereunder upon the receipt of vouchers therefor in
accordance with such procedures as the Company may hereafter establish.
5. Subject to such consulting assignments as may be made
pursuant to Section 2 hereof, Consultant shall be free to exercise his
discretion and independent judgment as to the method and means of the
performance of his consulting services under this Agreement and shall in no
event be considered an employee of the Company or any of its subsidiaries nor
shall Consultant be entitled to be eligible to participate in any benefits or
privileges given or extended by the Company to its employees.
6. In order for Consultant to render such services, the Company
shall make available to Consultant such of its facilities as are reasonably
required by Consultant in the performance of services hereunder.
7. Consultant represents and warrants that he shall at no time
use for the Company's benefit or disclose to the Company any information he
has received from third parties and which he is still lawfully obligated to
keep confidential.
8. Consultant may be given access to certain proprietary
information, including trade secrets, of the Company. In order to preserve in
strict confidence all such information during the term hereof and as long
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thereafter as the information received is not in the public domain and except
as hereinbefore provided, Consultant shall not use or disclose this
information developed or obtained by Consultant in the performance of this
Agreement.
9. The Company agrees to prepare and file on the first
anniversary of this Agreement, a Registration Statement (the "Registration
Statement") on Form S-8 under the Securities Act of 1933, as amended (the
"1933 Act"), covering, inter alia, the registration of the shares of Common
Stock of the Company issuable upon exercise of the Options granted to
Consultant hereunder. Company shall keep the Registration Statement updated
so as to remain effective for resales of the Common Stock issuable upon
exercise of the Options granted to Consultant for so long as any Options
remain outstanding under this Agreement. In the event that the Registration
Statement shall be unavailable to Consultant to resell all of the shares of
the Common Stock acquired by Consultant pursuant to exercise of the Option
because Consultant may be deemed an "affiliate" of the Company as such term is
defined in the 1933 Act, then the Company agrees to prepare and file a
registration statement on Form S-1 (or S-3 if available for use by the Company
at that time) to enable Consultant to sell the shares received upon exercise
of the Option. In the event the Plan is not approved by shareholders of the
Company, the Consultant may also piggyback his shares in a registration
statement called for by Xx. Xxxxx Xxxxxxxxx pursuant to Xx. Xxxxxxxxx'x
Consulting Agreement with the Company of even date herewith. The Company
shall cause such registration statement to become effective and to remain
effective for resales of the Common Stock issuable upon exercise of the
Options granted to Consultant.
Consultant and the Company agree to use their best efforts so as to
be in full compliance with the securities laws with respect to such
determination and resale provisions.
10. Representations and Warranties by the Company.
a. Right to enter Agreement. The Company hereby represents
and warrants that it has the right to enter into this Agreement and, to the
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best of the Company's knowledge, there are no outstanding assignments, grants,
licenses, encumbrances, obligations or agreements to which the Company is a
party, either written or oral, express or implied, which are inconsistent with
this Agreement.
b. Due Incorporation. The Company is a corporation duly
incorporated and subsisting under the laws of New York and has all requisite
corporate authority to own and lease its property, to carry on its business as
now being conducted and as proposed to be conducted, and to carry out the
transactions contemplated hereby and by the Option Agreement.
c. Authorization of Transaction. The Company has full
corporate authority to offer, issue, sell and deliver the Options and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement and the Option Agreement have been duly authorized by all
proper and necessary corporate or other action and this Agreement and the
Option Agreement, when executed and delivered, shall constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
except to the extent that the remedy of specific enforcement or injunctive
relief subject to the discretion of the court before which any proceedings may
be brought. The issuance, sale and delivery of the Option and the issuance,
sale and delivery of the Common Stock into which the Option is exercisable
(the "Underlying Common") have been duly authorized by all necessary corporate
action on the part of the Company. When issued in accordance with the Option,
the Option and the Underlying Common will be duly and validly issued, fully
paid and non-assessable, free of any liens or restrictions, voting or
otherwise, the issuance of the Option and the Underlying Common will not be
subject to any preemptive or other preferential rights or similar statutory or
contractual rights.
d. Governmental Approvals. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
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department, commission, board, bureau, agency or instrumentality, domestic or
foreign, was, is or will be necessary or appropriate for the execution and
delivery of this Agreement and the Option Agreement.
e. Capitalization. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, $0.0001 par value, of
which 3,342,327 shares are issued and outstanding as of the date hereof. In
addition, the Company has reserved for issuance shares of its Common Stock as
follows: (i) 1,235,710 shares upon exercise of outstanding Redeemable Common
Stock Purchase Warrants sold in the initial public offering; (ii) 107,500
shares issuable upon exercise of warrants issued to the underwriter of the
Company's initial public offering; (iii) 320,000 shares issuable upon
exercise of Common Stock Purchase Warrants issued to X.X. Xxxxx & Co., Inc.;
and (iv) shares issuable upon exercise of options granted or to be granted
under the Stock Option Plan, which Plan currently relates to 800,000 shares.
In addition, the Company intends to reserve additional shares of Common Stock
for issuance upon exercise of warrants or options to be issued in connection
with its proposed acquisition of Sangen Pharmaceutical, Inc. and the
termination or modification of its office lease.
f. Securities Law Disclosure. The Company has filed all forms,
reports, statements or other documents required to be filed with the
Securities and Exchange Commission and NASDAQ, including, without limitation,
its Annual Report on Form 10-KSB for the year ended June 30, 1996, its
Quarterly Reports on Form 10-QSB for the three months ended September 30,
1996, and the three months ended December 31, 1996, all reports on Form 8-K
and all amendments and supplements to all of the foregoing reports
(collectively, the "SEC Reports"). As of the respective filing dates, the SEC
Reports complied as to form in all material respects with the requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") or the Securities Act
of 1933 (the "Securities Act") as applicable. The SEC Reports did not, at the
time they were filed, contain any untrue statement of material fact, or omit
to state a material fact required to be stated therein that was necessary to
make the statement therein, in light of the circumstances under which they
were made, not misleading.
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g. Financial Statements. Since the date of the audited balance
sheet included in the Company's annual report on Form 10-KSB for the year
ended June 30, 1996, there has been no event, development or condition of any
type of which the Company has knowledge that has had or is reasonably likely
to have a material adverse effect on or that has materially and adversely
affected the Company except as indicated or reflected on the Quarterly Reports
referred to in Section 10f.
h. Litigation; Compliance with Laws. The Company is not engaged
in, or a party to, or threatened with, any legal action, suit, investigation
or other proceeding by or before any court, arbitrator or administrative
agency, and after diligent inquiry, the Company does not know of any basis for
any such action, investigation or proceeding. There are no outstanding
orders, rulings, decrees, judgment or stipulation or proceedings to which the
Company is a party or by which the Company is bound, by or with any court,
arbitrator or administrative agency. The Company is operating its business in
compliance with the requirements of all federal, state and local laws,
regulations, judgments, injunctions, decrees, court orders and administrative
orders regarding such operations.
11. Should any one or more of the provisions of this Agreement
be adjudged unlawful by any court or arbiter or competent jurisdiction, the
remaining provisions of this Agreement shall remain in full force and effect.
12. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Any dispute between the
parties relating to the validity, interpretation, construction or performance
of this Agreement shall be submitted to binding arbitration conducted in
accordance with Exhibit B.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
PANAX PHARMACEUTICAL COMPANY LTD.
By /s/ Xxxxx X. Xxxxxxxx
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/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
