CONSULTING AGREEMENT
EXHIBIT 10.22
This
Agreement is made and entered into as of the 24th day of June, 2005 by and
between Xxxxxxxx X. Xxxxxxx (“Consultant”) and Xenomics, Inc,. a Florida
corporation, (the “Company”).
WHEREAS,
the Consultant guided the Company’s acquisition of Xenomics, a California
corporation, its recapitalization and initial financing, several rounds of
additional financing, and advised management in strategic planning and the
development of strategic relationships for more than a period of one year
without compensation; and
WHEREAS,
the Company’s management and Board of Directors wishes to assure that the
Company will continue to have the services of the Consultant available to it;
and
WHEREAS,
the Company’s Board of Directors has determined, in light of the importance of
the Consultant’s continued services to the stability and interests of the
Company and its stockholders to reinforce and encourage the Consultant’s
continued attention and dedication to the Company’s affairs.
WHEREAS,
the Company desires to engage Consultant to provide certain consulting services,
and Consultant is willing to be engaged by the Company to provide such services,
on the terms and conditions set forth below;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1.
Purpose:
The Company hereby engages Consultant for the term specified in Paragraph 2
hereof to render consulting advice to the Company relating to business
development, corporate finance and capital markets matters upon the terms and
conditions set forth herein.
2.
Effective
Date and Term:
|
2.1 |
Effective
Date.
This Agreement shall become effective as of July 1, 2005 (the “Effective
Date”). |
|
2.2 |
Term.
Unless earlier terminated pursuant to Section 10 hereof, the term of this
Agreement shall commence upon the date that Consultant assumes his
responsibilities under this Agreement (the “Start Date”) and shall
continue from the Start Date to the third anniversary thereof (the
“Initial Term”). This Agreement shall thereafter be automatically renewed
for successive one year periods unless either party shall notify the other
in writing of its intention not to renew this Agreement (a “Non-renewal
Notice”), which notice shall be given at least 90 days prior to the end of
the then current term (the “Expiration Date”). The period from the
Commencement Date to the Expiration Date, including the Renewal Term, if
any, is referred to herein as the “Term.” |
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3.
Duties
of Consultant: During
the term of this Agreement, the Consultant shall devote such portion of his
business time and attention to affairs of the Company reasonably necessary to
provide the Company with such regular and customary business development,
strategic planning, capital markets and corporate finance consulting advice as
is reasonably requested by the Company’s management and Board of Directors,
provided that Consultant shall not be required to undertake duties not
reasonably within the scope of this Agreement. So long as the Consultant serves
as a member of the Company’s Board of Directors, Consultant shall serve as
Co-Chairman of the Board.
3.1.
Permissible
Services. The
Consultant’s services will include advising the Company’s Board of Directors and
senior management on the following matters:
|
(i) |
in-licensing
and out-licensing technologies and
compounds; |
|
(ii) |
capitalization
and corporate organization of the Company; |
|
(iii) |
structure
and pricing of offerings of the Company’s securities in public and private
transactions; |
|
(iv) |
alternative
uses of corporate assets; |
|
(v) |
structure
and use of debt; |
|
(vi) |
application
and maintenance of listing of the Company’s stock in securities exchanges
and other appropriate markets; |
|
(vii) |
strategic
planning |
|
(viii) |
management
recruitment and compensation; and |
|
(ix) |
presentations
to institutional and professional individual investors in the U.S. and
Europe. |
3.2
Prohibited
Services.
The services to be rendered by the Consultant to the Company shall not (unless
the Consultant is appropriately licensed, registered or there is an exemption
available from such licensing or registration) include, directly or indirectly:
any activities which require the Consultant to register as a broker-dealer under
the Securities Exchange Act of 1934.
4.
Compensation:
In consideration for the services rendered by Consultant to the Company pursuant
to this Agreement, the Company agrees to pay Consultant (a) a signing bonus of
$50,000 payable on the Start Date; and (b) the annual sum of $198,000 at the
rate of $16,500 per month commencing on the Start Date (“Base Compensation”).
The Consultant’s Base Compensation may be increased, but not decreased by the
Compensation Committee of the Company’s Board of Directors (or similar committee
serving that function, the “Committee”). Once increased, such increased amount
shall constitute the Consultant’s Base Compensation and shall not be decreased.
In addition, Consultant shall be granted periodically options under the
Company’s various equity incentive plans commensurate with and having the same
term and conditions as those granted to the Company’s senior executive officers.
The Company will include the shares of equity securities of the Company which
may be issued upon the exercise of the options in any registration statement
under the Securities Act of 1933 which includes securities issuable to any other
executive officer of the Company. The Consultant shall be eligible to earn a
cash bonus of up to 15% of Base Compensation for each calendar of the
Term
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(or
portion thereof) based on meeting performance objectives and bonus criteria to
be mutually identified by Consultant and the Company’s Board of Directors.
5.
Expenses
and Services:
|
5.1 |
Consultant
is authorized to incur reasonable expenses in carrying out his duties and
responsibilities under this Agreement, including, without limitation,
expenses for travel, cellular telephone (including access charges and
business calls), and business entertainment. Additionally, Consultant
shall, after having obtaining the approval of the Company’s Chief
Financial Officer, which shall not be unreasonably withheld, be authorized
to incur reasonable expenses for the attendance of conferences in fields
relating to genetic testing, technology of interest to the Company,
finance of biotechnology ventures, and similar items related to
Consultant’s duties and responsibilities as Consultant deems necessary.
Company will reimburse Consultant for all such expenses upon presentation
by Consultant of appropriately itemized accounts of such expenditures or
the Company will pay such expenses
directly. |
|
5.2 |
During
the Term, Consultant shall be provided with office facilities and access
to Company information and financial records and an experienced
administrative assistant (which may be shared with no more than one senior
executive officer) as is deemed appropriate by the Consultant and approved
by the Company’s Chief Financial Officer and in the absence of a CFO, the
Company’s CEO. Such services and facilities will not be diminished without
the Consultant’s prior consent. |
6.
Liability
of Consultant:
The Company acknowledges that all opinions and advice (written or oral) given by
Consultant to the Company in connection with Consultant’s engagement are
intended solely for the benefit and use of the Company in considering the
transaction to which they relate, and the Company agrees that no person or
entity other than the Company shall be entitled to make use of or rely upon the
advice of Consultant to be given hereunder, and no such opinion or advice shall
be used for any other purpose or reproduced, disseminated, quoted or referred to
at any time, in any manner or for any purpose, nor may the Company make any
public references to Consultant, or use Consultant’s name in any annual reports
or any other reports or releases of the Company without Consultant’s prior
written consent. Consultant’s maximum liability shall not exceed the cash
compensation received from the Company.
7.
Consultant’s
Services to Others:
The Company acknowledges that Consultant and its affiliates are in the business
of investing in and providing financial and strategic consulting services to
others. Nothing herein contained shall be construed to limit or restrict
Consultant in conducting such business with respect to others, or in rendering
such advice to others.
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8.
Company
Information:
a.
The
Company recognizes and confirms that, in advising the Company and in fulfilling
it engagement hereunder, Consultant will use and rely on data, material and
other information furnished to Consultant by the Company. The Company
acknowledges and agrees that in performing its services under this engagement,
Consultant may rely upon the data, material and other information supplied by
the Company without independently verifying the accuracy, completeness or
veracity of same. The Company agrees to notify Consultant in writing via
overnight courier, facsimile or e-mail of any material event and/or change with
in twenty-four hours of its occurrence.
b.
Consultant
recognizes and acknowledges that by reason of Consultant’s retention by and
service to the Company before, during and, if applicable, after the 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 relating
to the field of in which the Company is actually engaged in research,
development, collaboration or sales at the time of such disclosure (collectively
referred to as “Confidential Information”). Consultant acknowledges that such
Confidential Information is a valuable and unique asset of the Company and
Consultant covenants that it will not, unless expressly authorized in writing by
the Company, at any time during the Consulting Term 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 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 this Agreement, directly or indirectly, it 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 Consulting Term
shall remain the property of the Company. Except as required in the performance
of Consultant’s duties for the Company, or 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 the Company and in a manner consistent
with the Company’s policies regarding Confidential Information. Upon termination
of this Agreement, the Consultant agrees to return immediately to the Company
all written Confidential Information (including, without limitation, in any
computer or other electronic format) in Consultant’s possession.
9.
Consultant
an Independent Contractor:
Consultant shall perform its services hereunder as an independent contractor and
not as an employee of the Company or an affiliate thereof. It is expressly
understood and agreed to by the parties hereto that Consultant shall
have
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no
authority to act for, represent or bind the Company or any affiliate thereof in
any manner, except as may be agreed to expressly by the Company in writing from
time to time.
10. Termination:
10.1 Termination
Without Cause or for Good Reason.
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(a) |
If
this Agreement is terminated by the Company other than for Cause (as
defined in Section 10.4 hereof) as a result of Consultant’s death or
Permanent Disability (as defined in Section 10.2 hereof), or if Consultant
terminates his employment for Good Reason (as defined in Section 10.1 (b)
hereof) prior to the Expiration Date, Consultant shall receive or commence
receiving as soon as practicable in accordance with the terms of this
Agreement: |
|
(i) |
a
severance payment (the “Severance Payment”), which amount shall be paid in
a cash lump sum within ten (10) days of the date of termination, in an
amount equal to the aggregate amount of the Consultant's Base Compensation
for the then remaining term of this
Agreement; |
|
(ii) |
immediate
vesting of all unvested stock options and the extension of the exercise
period of such options to the later of the longest period permitted by the
Company’s stock option plans or ten years following the Termination
Date; |
|
(iii) |
payment
in respect of compensation earned but not yet paid (the “Compensation
Payment”) which amount shall be paid in a cash lump sum within ten (10)
days of the date of termination; and |
|
(b) |
For
purposes of this Agreement, “Good Reason” shall mean any of the following
(without Consultant’s express prior written
consent): |
|
(i) |
Any
material breach by Company of any provision of this Agreement, including
any material reduction by Company of Consultant’s duties or
responsibilities (except in connection with the termination of
Consultant’s employment for Cause, as a result of Permanent Disability, as
a result of Consultant's death or by Consultant other than for Good
Reason); |
|
(ii) |
A
reduction by the Company in Consultant’s Base Compensation or any failure
of the Company to reimburse Consultant for material expenses described in
Section 5.1 or provide the services described in Section 5.2 of this
Agreement; |
|
(iii) |
The
failure by the Company to obtain the specific assumption of this Agreement
by any successor or assign of Company as provided for in Section 11
hereof; or |
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|
(iv) |
Upon
a Change of Control of Company (as such term is hereinafter
defined). |
10.2 Permanent
Disability. If
Consultant becomes totally and permanently disabled (as defined in the Company’s
disability benefit plan applicable to senior executive officers as in effect on
the date thereof) (“Permanent Disability”), Company or Consultant may terminate
this Agreement on written notice thereof, and Consultant shall receive or
commence receiving, as soon as practicable:
|
(i) |
amounts
payable pursuant to the terms of the disability insurance policy or
similar arrangement which Company maintains for the Consultant, if any,
during the term hereof; |
|
(ii) |
the
Compensation Payment which shall be paid to Consultant as a cash lump sum
within 30 days of such termination; and |
|
(iii) |
immediate
vesting of all unvested stock options. |
10.3 Death. In
the event of Consultant’s death during the term of his employment hereunder,
Consultant's estate or designated beneficiaries shall receive or commence
receiving, as soon as practicable in accordance with the terms of this
Agreement:
|
(i) |
compensation
equal to one year’s Base Compensation which shall be paid within 30 days
of such termination; |
|
(ii) |
any
death benefits provided under the Consultant benefit programs, plans and
practices in which the Consultant has an interest, in accordance with
their respective terms; |
|
(iii) |
the
Compensation Payment which shall be paid to Consultant’s estate as a cash
lump sum within 30 days of such termination;
and |
|
(iv) |
such
other payments under applicable plans or programs to which Consultant's
estate or designated beneficiaries are entitled pursuant to the terms of
such plans or programs. |
10.4
Voluntary
Termination by Consultant: Discharge for Cause.
The Company shall have the right to terminate this Agreement for Cause (as
hereinafter defined). In the event that Consultant’s employment is terminated by
Company for Cause, as hereinafter defined, or by Consultant other than for Good
Reason or other than as a result of the Consultant’s Permanent Disability or
death, prior to the Termination Date, Consultant shall be entitled only to
receive, as a cash lump sum within 30 days of such termination the Compensation
Payment. As used herein, the term “Cause” shall be limited to (i) willful
malfeasance or willful misconduct by Consultant in connection with the services
to the Company in a matter of material importance to the conduct of the
Company's affairs which has a material adverse affect on the business of the
Company, (ii) willful continuing refusal by Consultant to perform his duties
hereunder as reasonably directed by the Board of Directors after notice of any
such refusal to perform such
6
duties
or such reasonable direction was given to Consultant by the Board of Directors,
or (iii) the conviction of Consultant for commission of a felony. For purposes
of this subsection, no act or failure to act on the Consultant’s part shall be
considered “willful” unless done, or omitted to be done, by the Consultant not
in good faith and without reasonable belief that his action or omission was in
the best interest of the Company. Termination of this Agreement pursuant to this
Section 10.4 shall be made by delivery to Consultant of a copy of a resolution
duly adopted by the affirmative vote of all of the members of the Board of
Directors called and held for such purpose (after 30 days prior written notice
to Consultant and reasonable opportunity for Consultant to be heard before the
Board of Directors prior to such vote), finding that in the good faith business
judgment of such Board of Directors, Consultant was guilty of conduct set forth
in any of clauses (i) through (iii) above and specifying the particulars
thereof.
11.
Assignment:
This
Agreement shall be binding upon and inure to the benefit of the heirs and
representatives of Consultant and the assigns and successors of Company, but
neither this Agreement nor any rights or obligations hereunder shall be
assignable or otherwise subject to hypothecation by Consultant (except by will
or by operation of the laws of intestate succession or by Consultant notifying
the Company that cash payment be made to an affiliated investment partnership in
which Consultant is a control person) or by Company, except that Company may
assign this Agreement to any successor (whether by merger, purchase or
otherwise) to all or substantially all of the stock, assets or businesses of
Company, if such successor expressly agrees to assume the obligations of Company
hereunder.
12.
Change
In Control:
12.1
Definition. For
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred if (i) there shall be consummated (A) any consolidation or merger of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Company’s Common Stock would be converted
into cash, securities or other property, other than a merger of the Company in
which the holders of the Company’s Common Stock immediately prior to the merger
have substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company, or (ii) the
stockholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company, or (iii) any person (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the
“Exchange Act”)), other than the Company or any executive benefit plan sponsored
by the Company, or such person on the Effective Date hereof is a 20% or more
beneficial owner, shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company representing 20% or
more of the combined voting power of the Company’s then outstanding securities
ordinarily (and apart from rights accruing in special circumstances) having the
right to vote in the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise, or
(iv) at any time during a period of two consecutive years, individuals who at
the beginning of such period, constituted the Board of Directors of the Company
shall cease for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by the
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Company’s
stockholders of each new director during such two-year period was approved by a
vote of at least two-thirds of the directors then still in office, who were
directors at the beginning of such two-year period.
12.2
Rights
and Obligations. If
a Change in Control of the Company shall have occurred while the Consultant is
director of the Company, the Consultant shall be entitled to the compensation
provided in Section 10.1 of this Agreement upon the subsequent termination of
this Agreement by either the Company, or the Consultant within two years of the
date upon which the Change in Control shall have occurred, unless such
termination is a result of (i) the Consultant’s death; (ii) the Consultant’s
Disability; (iii) the Consultant’s Retirement; or (iv) the Consultant’s
termination for Cause.
7.
Indemnification:
Consultant,
as such and as a Director of the Company, shall be indemnified by the Company
against all liability incurred by the Consultant in connection with any
proceeding, including, but not necessarily limited to, the amount of any
judgment obtained against Consultant, the amount of any settlement entered into
by the Consultant and any claimant with the approval of the Company, attorneys’
fees, actually and necessarily incurred by him in connection with the defense of
any action, suit, investigation or proceeding or similar legal activity,
regardless of whether criminal, civil, administrative or investigative in nature
(“Claim”), to which he is made a party or is otherwise subject to, by reason of
his being or having been a director, officer, agent or employee of the Company,
to the full extent permitted by applicable law and the Certificate of
Incorporation of the Company.. Such right of indemnification will not be deemed
exclusive of any other rights to which Consultant may be entitled under
Company’s Certificate of Incorporation or By-laws, as in effect from time to
time, any agreement or otherwise.
14.
Miscellaneous:
a.
This
Agreement between the Company and Consultant constitutes the entire agreement
and understanding of the parties hereto, and supersedes any and all previous
agreements and understandings, whether oral or written, between the parties with
respect to the matters set forth herein.
b.
Any
notice or communication permitted or required hereunder shall be in writing and
shall be deemed sufficiently given if hand-delivered or sent (i) postage prepaid
by registered mail, return receipt requested, or (ii) by facsimile, to the
respective parties as set forth below, or to such other address as either party
may notify the other in writing.
If
to the Company,
to:
Xenomics,
Inc.
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Attention:
V. Xxxxxxx Xxxxx, CEO
8
If
to Consultant,
to:
Xxxxxxx
X. Xxxxxxx
c/x
Xxxxxxx Partners Ltd.
0000
Xxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxxx X. Xxxxxxx, Managing Partner
With
a required copy to:
Xxxxxx
& Xxxxxxxxx LLP
000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx
Xxxx, XX 00000
Attention:
Xxxx Xxxxxx, Partner
c.
This
Agreement may be executed in any number of counterparts, each of whom together
shall constitute one and the same original document.
d.
This
Agreement may not be changed orally, but only by an agreement in writing signed
by the party against whom any waiver, change, amendment, modification or
discharge is sought.
e.
The
invalidity of all or any part of any provision of this Agreement shall not
render invalid the remainder of this Agreement or the remainder of such
provision. If any provision of this Agreement is so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
f.
This
Agreement shall be governed by and construed in accordance with the law of the
State of New York without giving effect to the principles of conflicts of law
thereof. The parties hereto each hereby submits herself or itself for the sole
purpose of this Agreement and any controversy arising hereunder to the exclusive
jurisdiction of the state courts in the State of New York.
g.
Any
amounts due hereunder to Consultant which remain unpaid after their due date,
shall bear interest from the due date until paid at a rate of the prime rate (in
effect on the date thereof for Citibank).
h.
The
Company’s obligations to make payments under Section 10 and 12 shall survive
termination or expiration of this Agreement.
i.
Consultant
shall not be required to mitigate damages or the amount of any payment provided
for under this Agreement by seeking other employment or otherwise after the
termination of this Agreement.
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IN
WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed, as of the
date first above written.
| CONSULTANT | ||
| |
|
|
| /s/ Xxxxxxxx X. Xxxxxxx | ||
|
| ||
| Xxxxxxxx X. Xxxxxxx | ||
|
XENOMICS,
INC. | ||
| |
|
|
| By: | /s/ V. Xxxxx Xxxxx | |
|
| ||
| Name: V. Xxxxxxx Xxxxx
Title:
Chief Executive Officer | ||
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